MTW vs. Tariffs

The Issue:
You may be aware that the US has recently imposed 25% tariffs on hundreds of billions of dollars of Chinese imports. The proposed, and in some cases implemented, tariffs have been announced in “rounds” and the latest round, Annex C, includes meters imported from China. This will impact MTW as well as several other US meter companies.

To clarify further:

Basically, as of now, there have been 3 lists of items that are subject to the President’s 25% tariff on Chinese imports. These are listed at “HTS codes” and in this latest list, Annex C, water and gas meters like our MJs, SMs, and N/C meter are included. The way it is currently presented all importers are to assume that the tariffs WILL go into place for “products that are entered for consumption or withdrawn from warehouse for consumption after July 6, 2018”. This means that MTW and its vendors and customers have to operate under the assumption than any products that have left our suppliers after 7/6/18 are subject to the 25% tariff increase. Previous annexes have included meter couplings which WILL be subject to the 25% tariff increase for any incoming orders that MTW has placed with its vendors.

For further clarification, please see below. Note that HTSUS (Harmonized Tariff Schedule of the United States) codes 9028.xx.xxxx on page 54 specifically address the meters imported by MTW, N/C, and various other meter vendors. Also note that these codes match those that MTW uses on its commercial invoices provided to US Customs and Border Protection and that the 25% is IN ADDITION TO the current 3-6% tariffs that MTW currently pays. There is no gray area with regard to whether our products are subject or not.
https://ustr.gov/sites/default/files/2018-0018%20notice%206-15-2018_.pdf

We have submitted this letter to the Office of the United States Trade Representative as well as copying our local and US representatives via email, certified letter, and in some cases by hand-delivering copies to their local offices.
The Impact
What this means is that MTW will experience significant price increases on the majority of our imports. We at MTW DO NOT WANT TO DISRUPT YOUR BUSINESS so we are going to do our best to minimize the impact these new tariffs have on you and your customers and to communicate any changes clearly and with a reasonable timeline. As of now MTW plans to:

Keep ALL standard and special pricing in place thru the end of 2018.
Minimize price increases to our customer on our products that will be affected by the 25% tariff. That means that we do NOT plan to pass the 25% increase and keep our margins across the board. MTW will eat much of the pending “excrement sandwich”.
MTW will distribute our 2019 price pages on or before 10/1/18 to go into effect on 1/1/19
MTW suggest communicating the above with your customer base. This may be an opportunity to get contracts signed and orders shipped “in full” to new construction jobs based on the uncertainty that none of us can control. It’s cheap insurance.
MTW suggest communicating with all of your staff as well. If you are receiving this message please forward to all superiors and any of your staff who may be affected by this announcement so that we are all on the same page and to minimize any surprises.

I want to make this fair to all parties, your customers included, and the above is the best plan that MTW has right now. Once we have more information regarding any possible exemptions or any changes in the tariff timeline for Annex C items then we will reach out again, most likely at the time the new price pages are released in the next 8 weeks.
As always, thanks for your business and rest assured that MTW will do our best to get thru this latest challenge with you.

Matthew T White, President/CEO
Meter Technology Werks
Office: 877-9METERS
Mobile: 813-334-4728 Fax: 813-876-1721
Email: matt@0444869.netsolhost.com